Financial Transparency Coalition

An explosion of anti-corruption protests this month saw effigies burnt in India, hundreds protesting in Russia, and mass riots in China. As tensions rise, the focus of the anti-corruption debate has begun to shift. Instead of seeing corruption as hurtful because it destroys the environment, weakens governments, and harms the poor, some governments have begun to see corruption as hurtful because of its economic consequences. A recent Moscow Times article by Anders Aslund incorporates this shift in thinking. Claiming corruption is so pervasive that investments to increase productivity are virtually impossible, Aslund writes: “Russia cannot build public infrastructure because standard...

WASHINGTON, DC – After nearly a year of delays, the UK Bribery Act went into effect on July 1st. The act mandates stiff penalties, including up to 10 years in jail, for bribes paid by any business with a UK presence. In an ironic twist, while the UK Act is being touted as an extension to its cross-Atlantic counterpart, the U.S. Foreign Corrupt Practices Act (FCPA), anti-bribery proponents charge that the FCPA is under attack.

The powerless have few tools to use against the powerful. Sometimes the powerless are a minority. Sometimes they are a majority. Suffrage, freedom of speech, and freedom of the press are tools civilizations have developed to give powerless people more power. But the other side has its own tools, which the powerful use to perpetuate their power. Corruption and nepotism are the most obvious examples. These tools are not only used by theocrats and autocrats. They are used in democracies too, and they erode democratic systems by concentrating power in the hands of a few, depriving the powerless of...

I am rarely surprised when those who are not economists make egregious economic errors. I am only moderately surprised when those errors are in the Financial Times. I suppose I should get used to it. Here’s a little basic economics. Economists, whether talking about banking or housing, trees or oil, always follow a set of fundamental principals. These include very basic ideas. For example, when conducting cost-benefit analysis, count the entire range of relevant benefits and costs. Say you want to do an economic analysis of a project to build a bridge. You count all the costs—labor, materials, etc.—and all...